6 years ago, I was almost totally broke…

My credit score was on the low and I almost went homeless.

I had made some very bad choices along the way and my debts were on the roof.

From overdue bills, overdue rent,  snowballing interest charges on my credit card bills –  I was on the verge of losing everything. I had less than $100 left in my bank account.

I had one thing left in me though – a burning desire to be debt free –  A strong urge for financial freedom.

I vowed to myself that I would never fall into the same financial pit again.

Many people today are going through the same situation in silence.

Without help and proper advice one could easily end up depressed or even fall into greater financial difficulty.

I am no finance expert, but I will share with you a few tricks that I have learnt from my own experience and those who have walked the same path before me which could help you to walk out of debts and even start your path towards financial freedom and even with spare cash towards building an investment portfolio.

Try Spending Within Your Means

Don’t be a spendthrift.

Always have a plan on how to spend your money and what to spend it on. You can always shelve that family vacation to a time when you have saved enough for it. Or maybe do some research on a less costly alternative.

Have a budget and pay yourself only after you have saved. This will prevent you from incurring unnecessary expenses in the short run, and in turn, leave you with just a few dollars for yourself.  You also do not deprive yourself of money that could you have been used for investment – and make more money.

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Pay your credit card  bills on time and pay them fully!

Paying more than the minimum for your personal credit card payments is very important. In fact, pay your credit card bills completely.

When you do so it will help you to settle any outstanding credit card debts faster; this makes it easy to prevent the effect of interests charges which is the main reason why simple debts turn into large bad debts. Going with a minimum payment plan on your credit card would take you forever if you intended to settle the debt. Besides, it will forever be a burden at the back of your mind.

Get a side hustle or another job

If you don’t mind working another shift, a side hustle would be a great pivotal point.

It could easily help you to earn some extra cash that you could direct to settling any debts that you have. The best way to get a side hustle is to cash in on a hobby or skill that you already have, or take up some freelance assignments.

However, you should make sure that every dollar that you earn either helps you to pay your debts or is used to accumulate more wealth through investments.

Have a passive income plan.

Invest. But before you invest, make sure you do your research. There are many scams around.

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Have a savings plan in place. Always…

Many people will tell you that there is no need to have considerable savings in your bank account because the returns are simply too low or you can rely on some form of easy credit schemes.

As crude as this sounds ; emergencies are real, you could get sick, or get involved in some form of mishap, get a broken knee while skiing on holiday,  or the organisation that you are working for could even  delay your remuneration or you could have suddenly incurred bills that are far bigger than you expected. Or there might be a sudden retrenchment without proper compensation. You might argue that you could take legal action against unfair retrenchment, but how are you going to pay for your daily necessities while you await the outcome?

If you have saved for such things, you can use the money for these emergencies and avoid payday loans.

Consolidate Your Loans If Possible

The option of consolidating loans will help you to pay off huge loans that might prove to be overwhelming.

Payday loans, for instance, are good if they are consolidated as they incur huge interests that compound over time.

You can find a consolidation firm that has a high experience level to help you determine a plan that works at the best rates for you.

It is usually advisable to pay off our most expensive loans/ debt first.

Focus on the major debts that are causing you to be charged

the  highest interests rates.

Then follow up with the debt which charges you with the next highest interest rates. Continue this process once you pay off the loan.

Doing this will easily cut down the  debts you owe  and allow minimise the cash that you have to pay due to accumulated interest.

To sum up, there is no one-size-fits-all solution for any debt situation. You know your situation best and what works for you. However, if you want to get yourself out of a financial rut, you have to plan and seek professional advice on how to best solve your predicament.

Written by Abraham A. L.
6th July 2018

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Lessons for life
Life hacks